Can Silicon Valley Learn to Stop Worrying and Love the Pentagon?

SIMI VALLEY, California—Palmer Luckey stands out. At just 26 years old, the exuberant, fast-talking founder of virtual reality headset company Oculus VR is one of the youngest people in the room by several decades. Surrounded by clean-cut suits with muted ties and shiny shoes, Luckey is sporting a goatee and a collared Hawaiian shirt.

Luckey is here to tell the audience of national security heavyweights at the annual Reagan National Defense Forum in Simi Valley, California, something they don’t want to hear: If the U.S. Defense Department wants to win over Silicon Valley, it needs to bet big on small start-ups.

“What you need to do is fix some of the economics,” Luckey said at the conference on Dec. 1, noting that there have been no new defense companies worth more than $1 billion since the end of the Cold War. “Government needs to concentrate their investments and generate some real success stories.”

Instead of spending small sums of money on a multitude of experimental pilot programs that never make it into production, Luckey said the Pentagon should invest significant dollars—enough to attract the kind of outside investors that can sustain a new company—on a small number of promising technologies.

Of course, Luckey’s company and others like it would be the primary beneficiaries of such a strategy. But he believes the U.S. government would benefit, too. Urging the bureaucrats to implement more effective investment practices is just one of the ways Luckey and a small group within the tech industry are leading the charge to transform the fraught relationship between the U.S. military and Silicon Valley.

Although the U.S. government pioneered many of the great technological breakthroughs of the 20th century—the internet and satellite navigation, for example—due to declining military budgets and soaring investment in tech companies in the 1990s, the private sector is now driving innovation. The Pentagon needs to leverage the private sector in order to maintain its edge, experts say, and the tech industry is drawn to lucrative government contracts, but the two parties are struggling to see eye-to-eye on key issues, including business practices and the ethics of war.

This past year marked a turning point in the relationship as the tech community began choosing sides in a contentious debate over the morality of using controversial new technology such as autonomy—systems that can function without a human telling them what to do—and artificial intelligence on the front lines of battle.

On the one side is what Luckey calls a “vocal minority” protesting government work. In June, Google opted not to seek another contract for the Pentagon’s flagship artificial intelligence program, Project Maven, after 3,000 employees signed a letter opposing the company’s involvement in the project on the grounds that Google “should not be in the business of war.” Meanwhile, at Microsoft and Salesforce, a cloud-based software company based in San Francisco, employees protested the companies’ contracts with the U.S. Immigration and Customs Enforcement and Customs and Border Protection, respectively, for the agencies’ role in separating migrant families. And at Amazon, employees demanded the company stop selling its facial recognition software to police departments.

Google’s was the only successful protest.

On the other side are firms like Luckey’s Anduril Industries, Hivemapper, and SpaceX, as well as leadership at Amazon Web Services and Microsoft, all of which are publicly vying for Defense Department contracts.

In an exclusive interview with Foreign Policy, Luckey freely admitted that when he decided to found Anduril the potential for lucrative government contracts was a significant draw. He saw an opportunity to fill a gap that is not currently being met. As one of just a handful of tech companies working on defense issues, Luckey knew Anduril “would be able to punch above our weight.”

But Luckey, a self-described “libertarian-leaning Republican,” also considers himself a patriot. He said that cutting-edge technology does not beget totalitarianism “accidentally”; unlike Russia and China, the United States “has a really strong record of protecting human rights.”

That has not always been true—witness, most recently, the Abu Ghraib torture scandal and other alleged U.S. human rights abuses in Iraq and Afghanistan.

But Luckey insisted: “I think that when people talk about potential for abuse in the United States, they need to look at this as part of a holistic, bigger picture, which is that Russia and China are already doing this stuff.”

He is concerned by the rise of China, particularly its rapid advances in technology driven in part by strong civil-military fusion. Beijing is already using artificial intelligence and facial recognition systems to surveil its citizens and detain hundreds of thousands of Muslims in concentration camps, where they are reportedly forced to memorize Communist Party propaganda and renounce Islam.

Luckey slammed Google and other tech companies that refuse to work with the U.S. military while happily making concessions to the Chinese government. For example, until recently Google was working on a controversial project to launch a censored search engine in China, and it is currently working to establish an artificial intelligence center at Tsinghua University. Tsinghua this summer hired Jeff Dean, Google’s AI chief, as a member of its Advisory Committee on Computer Science.

“You have these supposedly American companies that have to bow to Chinese interests because the Chinese are playing hardball with trade,” Luckey said. “They see China as a multi-hundred-billion-dollar opportunity much more than they see them as a national security threat.”

At first glance, Luckey seems like an unlikely figurehead for the pro-Pentagon movement. He was homeschooled by his parents in Long Beach, California, and as a teenager had an insatiable interest in gaming and virtual reality. Following in the footsteps of tech giants like Apple’s Steve Jobs and Facebook’s Mark Zuckerberg, Luckey dropped out of college—he majored in journalism—in 2012 to found Oculus, which in 2018 accounted for over 25 percent of the entire VR market. After just 18 months, Facebook acquired Oculus for $3 billion, one of the fastest multibillion-dollar exits of all time.

Luckey attributes the explosion of the VR industry over the last few years to his decision to sell Oculus to Facebook.

“Facebook was a great way where we could turbo-charge not just Oculus but the entire virtual reality industry,” he said. “The modern VR industry would not exist without that Facebook acquisition.”

This is where Luckey’s story diverts from the norm. First, shortly after the acquisition, ZeniMax Media filed a lawsuit contending that Luckey and Oculus used ZeniMax’s intellectual property to develop the Oculus Rift. Eventually, a jury trial found Luckey broke a nondisclosure agreement with ZeniMax but did not steal trade secrets, and in June the two parties settled the case.

Luckey declined to comment on the specifics of the case, though he said he felt “pretty vindicated” by the decision.

“When you get acquired for billions of dollars, people really come out of the woodwork,” he said.

But another fight was brewing that would leave a lasting mark. After working happily for a few years at Facebook’s Silicon Valley campus—the period in which Oculus shipped its first consumer product, the Oculus Rift—Luckey abruptly left the company. No explanation for the departure was given by either party, but the Wall Street Journal reported Luckey was fired for his support of then-candidate Donald Trump.

Luckey would not specifically confirm or deny the report and declined to comment on anything regarding Facebook (the company’s poor record on protecting users’ data, though, speaks for itself). But he noted that conservatives are often ostracized in Silicon Valley, and their voices are drowned out by “a very small, radical, vocal minority that is against the United States government having the best military technology.”

“You basically just cannot talk about your politics if you do not agree with the groupthink in Silicon Valley,” Luckey said. “Because everyone is so afraid to say anything at all, lest they get crucified by their coworkers or blacklisted for promotion, there are just no visible people that are talking about these conservative ideas.”

He added: “If I had been a Hillary Clinton supporter, I would be astounded if I was not still at Facebook.”

Luckey decided it was time to start a new venture, one that would break with the liberal culture of Silicon Valley. He had always had an interest in national security—as a teenager he worked at a U.S. Army-funded research laboratory that used virtual reality to treat veterans with post-traumatic stress disorder—and set out to solve a problem that had bothered him for a long time. On the one hand, Luckey said that America’s major defense primes such as Lockheed Martin and Northrop Grumman are not equipped with the technology, tools, or talent to build some of the most critical next-generation military technology: artificial intelligence, immersive displays, autonomous systems, and more. On the other hand, the Silicon Valley companies that are very good at developing this technology refuse to work on national security problems.

“You have a group of people who want to do it who can’t, and a group of people who can but won’t,” Luckey said.

He co-founded Anduril Industries—named after a sword in J.R.R. Tolkien’s Lord of the Rings series—in 2017 to try to bridge that gap.

“I wanted to make a place where we could have that—we could build that technology, build those tools, recruit that talent, and work unabashedly on national security problems without having to worry about how it might alienate our user base,” Luckey said.

Alongside companies like Amazon Web Services and Microsoft, which are vying for the Pentagon’s massive cloud contract, Anduril is positioning itself as a liaison between the U.S. government and the tech industry. Anduril already has contracts with multiple entities within the Defense Department and Department of Homeland Security to provide situational awareness and force protection at military bases and the U.S. border with Mexico. The company recently hired Washington insider Christian Brose, who led the Senate Armed Services Committee’s staff under the late Republican Sen. John McCain for four years and served as a speechwriter to former Secretaries of State Condoleezza Rice and Colin Powell, as its head of strategy.

Normally a staffer with Brose’s experience would go on to join the traditional defense industry or big-name consulting. But Brose said he made the unconventional move to join a one-year-old start-up because he believes Anduril will be a key piece of how the U.S. military “ensures its technological advantage in a new era of great power competition.”

Like Luckey, Brose believes improving the relationship between Silicon Valley and the Defense Department is “a two-way street.”

“For our part, the technology community needs to be engaged with our military. We need to understand their challenges and constraints, be patient at times, and not always assume that we know best,” Brose said. “Working together is not optional. It is essential.”

In addition to urging the Department of Defense to tweak its strategy in order to better accommodate the business environment of Silicon Valley, Luckey is also critical of the tech community. In August, he wrote a blunt op-ed in the Washington Post titled “Silicon Valley Should Stop Ostracizing the Military” with Trae Stephens, Anduril’s chairman.

“We understand that tech workers want to build things used to help, not harm. We feel the same way. But ostracizing the U.S. military could have the opposite effect of what these protesters intend: If tech companies want to promote peace, they should stand with, not against, the United States’ defense community,” Luckey and Stephens wrote.

Luckey is no warmonger. He believes the United States “should think very, very carefully” before putting troops in danger. Many people assume hawks want to fight wars; for Luckey, it’s the exact opposite. He got into the defense industry because he wants to avoid those fights.

“The real goal here is to deter conflict by having the best technology possible,” Luckey said.

But in order to set the global standard on the use of artificial intelligence and other emerging technology, the United States must maintain a technological edge, he stressed.

“I don’t want to pretend that there are no ethical challenges. But I think it’s a moral imperative that we lead, not that we just sit here and let Russia and China and these other countries define the rules that dictate how artificial intelligence is used,” Luckey said. “We won’t have a seat at the table if we’re not in the lead.”